The generation receiving the most press right now is Generation Y (aka Millennials). For the most part, millennials are digital natives. They understand and move through the Information Age in ways members of older generations seldom can. Millennials are also the generation about to fill many of the jobs found in the supply chain field. They will be comfortable with digital supply chains when such chains finally mature — in fact, you could call them millennial supply chains. Jennifer McKevitt (@mckvt) writes, “The digital supply chain, fueled by customer expectations and the availability of vast amounts of data, is a necessary adaptation to increased demand and e-commerce transactions.”[1] Although “supply chain” is often used in the singular, we all know there is no such thing as “the” supply chain. Supply chains vary by industry and by company. Some companies run multiple supply chains. Eventually, however, all of those supply chains are going to be digitized if they are going to survive in the years ahead. As Luigi De Bernardini (@ldebernardini), CEO of Autoware, writes, “Today’s market dynamics — with the customer calling more of the shots — requires new digital technologies to work together to transform the supply chain.”[2]
Supply Network vs Supply Chain
Stephen Laaper (@s_laaper) and Adam Mussomeli, principals at Deloitte Consulting, describe the traditional view of supply chains. “The supply chain,” they write, “centers on the movement of materials, finished goods, capital, and information through assets and from place to place. In traditional supply chains, items travel linearly, with each step dependent on the one before it.”[3] Supply chain professionals know the term “chain” has not been an accurate noun for some time. The modern supply chain has really been a supply network for years. Laaper and Mussomeli predict this trend is only going to grow stronger. They explain, “Dramatic increases in digital connectivity and technological advancements are now disrupting this established model. As a result, many supply chains are transforming from a staid sequence to a dynamic, interconnected system that can more readily incorporate ecosystem partners. This shift from sequential supply chain operations to a more open system — the digital supply network (DSN) — could lay the foundation for how companies compete in the future, integrating information from many different sources and locations to drive production and distribution.”
Networks consist of nodes and connections. Industry analyst Adrian Gonzalez (@talkinlogistics) explains that relationships between those nodes is as important as the technology connecting them. He writes, “When we talk about supply chain and logistics, we often focus on new and emerging business processes and technology — and those are certainly important and critical things for success — but at the end of the day, anyone who has been in this industry for a while recognizes that supply chain management is a relationship business, and relationships are critical for the success of any company.”[4] In an interview with Gonzalez, Brent Nagy, Vice President of Enterprise Customer Strategy at C.H. Robinson, stated, “When you think about [various internal functions involved], it boils down to a couple of key things for me. First is alignment and really understanding the customer and their needs and challenges, and then synchronizing how the work is done and prioritized. You can’t have one function tripping over the other, each with their own agenda, working in silos. … It’s really understanding who owns the relationship, how the relationship from an alignment standpoint cascades down to operations, and having clearly defined roles and responsibilities for everyone involved.” When you add external functions and relationships, the picture can quickly become very complex.
One way to deal with that complexity is to leverage capabilities found in cognitive computing platforms. Digital supply networks are fundamentally driven by data and cognitive platforms can collect, integrate, analyze, and act upon both structured and unstructured data. Just as importantly, cognitive computing platforms can used to help foster better alignment and can automate processes so that processes remain synchronized. When anomalies occur anywhere in the network, cognitive computing systems can alert decision makers so the problem can be handled. That’s why I believe cognitive computing platforms are going to be found at the heart of every world-class digital supply network.
How Digitization will Affect Variation Segments of the Supply Network
“Digitizing the supply chain,” McKevitt explains, “involves a continuous flow of information between the physical and digital worlds. The sharing of data passes information directly to staff who employ it while working within the supply chain and can therefore make necessary adjustments to orders and production. This back and forth exchange of information — digital and practical — acts as a gateway between effectively integrated technologies.” Below are some of the ways digitalization is going to affect various segments of the supply network. Cognitive computing platforms can help in each of these areas.
Manufacturing and Retailing
De Bernardini observes, “The market today requires speed, flexibility and adaptability, particularly for tailor made solutions. The need for manufacturing companies to differentiate themselves is more important than ever, and there’s an opportunity to offer products designed and built for the needs of a single customer.” In this customer-is-king world, ensuring companies have an effective digital-path-to-purchase, omnichannel strategy is critical for success. Manufacturers and retailers need to collaborate as never before. De Bernardini concludes, “The times we live in are certainly exciting and new, but also dangerous for those not ready to adopt new technologies. The ease of use of new tools, as well as their low cost, dramatically reduces the entrance barriers in markets that were previously considered protected.”
Procurement
McKevitt and her colleague Edwin Lopez (@EdwinLopezT37) report analysts at Supply Chain Digest concluded, “More and more, digitization is becoming an anchor for growth strategies and procurement is no exception.”[5] They explain, “The Hackett Group … [has] identified four lower-cost digitization priorities procurement professionals can pursue: speeding the purchase to pay process; reducing regulatory non-compliance; improving organizational agility and supporting enterprise-wide digital goals. … The digitalization of the supply chain has shifted from a focus on lowering costs while maintaining quality and service to a focus on increasing sales. As globalization takes hold, the supply chain has turned to data, the cloud and connected technology for the same purpose: expansion. Procurement is particularly poised to benefit from digitization, given its transaction and process-based nature. ”
Logistics
Mark Jackson, an executive with UPS Europe, insists the digital revolution is “changing the way we think about logistics.”[6] He explains, “This digital revolution has led to huge growth in areas such as e-commerce, global collaborative research, development, and manufacturing, as well as in logistics. There will be more to come — ubiquitous mobile connectivity combined with data gathering and analytics will drive the emergence of new services, products, and business models in all industries — including healthcare, energy, finance, and government. Dozens of companies are even trying to invent the future too, looking at how to use drones for data collection, for last mile deliveries, or for other purposes. When it comes to supply chain management, such rapid advances are forcing organizations to constantly re-evaluate their networks and use digital technology to significantly enhance their services.”
Summary
Jackson concludes, “The dynamics of the modern digital age mean that businesses need to adapt quickly. Logistics and supply chain networks are increasingly being put under pressure to deliver to more complex networks due to globalization and higher expectations regarding service levels. In order to achieve this cost-effectively, digital technology, smart network design, and optimization are key to a company’s success in a rapidly changing world.” One of the key technologies, as I noted above, is cognitive computing. De Bernardini explains, “Big Data and analytics — all the data and information generated by IoT — would be useless without the ability to store and analyze apparently unrelated bits of data. And the exponential growth of the data size makes it impossible to use only manually generated models or algorithms. Artificial intelligence (AI), therefore, is becoming ever more important, providing the ability to autonomously generate models and find correlations in the data that had not been visible before — not only because of the continuous growth of data volumes, but also the continuous transformation of the data sets themselves brought on by new data sources.” Just as previous generations of workers are turning over the workplace to millennials, supply chain operations and processes of the past need to be updated and digitized. We need millennial supply networks so that the next-generation of supply chain professionals can take full advantage of the Information Age.
Footnotes
[1] Jennifer McKevitt, “Survey: Digitization essential for next-generation supply chains,” Supply Chain Dive, 11 April 2017.
[2] Luigi De Bernardini, “The Digital Supply Chain,” AutomationWorld, 17 April 2017.
[3] Stephen Laaper and Adam Mussomeli, “Introducing the Digital Supply Network,” The Wall Street Journal, 24 April 2017.
[4] Adrian Gonzalez, “Alignment, Synchronization, Communication: Building Successful Relationships in Supply Chain Management,” Talking Logistics, 17 April 2017.
[5] Jennifer McKevitt and Edwin Lopez, “Procurement must go digital to keep up with the pack,” Supply Chain Dive, 18 April 2017.
[6] Mark Jackson, “The World Is Digital. What About Your Logistics?” The Wall Street Journal, 21 April 2017.
